By Henry Hing Lee Chan

The UK 2017 Election: A Call for Exit from Brexit?

The
year 2016 marked the rise of populism in the Western world, particularly in the
UK and the US. The unexpected outcome of the June 23, 2016 referendum in favor
of the UK exiting from the EU and the election of a maverick political outsider
to the White House in November 2016 all speak to the rise of populism in the
West. The margins of victory in both cases were slim: it was 51.9 percent vs
48.1 percent in favor of Brexit in the UK case, and while President Trump won
the electoral vote by 304 to 227, he lost the popular vote by 46.1 percent to
48.2 percent and had almost three million popular votes less than that of his opponent,
Hillary Clinton. Few observers challenged the outcome of both electoral
exercises, but the closeness of the counts reflected the divided conditions of
the societies and many analysts had expressed concerns about the political stability
of both the UK and the US in 2017.

Populist Reversals in 2017?

If the
year 2016 defined Western populism, 2017 seems to indicate a reversal. US President
Trump’s unprecedented plunge in popularity for a newly installed president and
his deepening legal troubles confirm the worries expressed earlier by many
analysts. The fixed term nature of the US presidency and the strong executive
power bestowed on him have somehow shielded the country from political
paralysis. However, the surprise decision of UK Prime Minister Theresa May to
call a snap election on April 18 and the unexpected election result that saw
the Conservative Party losing its parliamentary majority plunged the country
into political instability and raised the spectre of an exit from Brexit — an
almost unthinkable black swan event.

The series
of electoral victories in the Netherlands and France by pro-EU politicians have
further led many to wonder if the populist politics that defined 2016 are being
met with equal and opposite forces in 2017. The sweeping victory of Emmanuel
Macron as French President and his parliamentary majority of 61.5 percent seems
to support that notion. The series of unexpected local election victories by German
Chancellor Angela Merkel have improved the electoral prospect of her political
party, the Christian Democratic Union, going into the September German national
election. She is widely expected to win the election and the shared worldview
of Macron and Merkel have reinforced the belief that the silent majority are
pushing back against populism in Europe.

Election Results a Call for Exit from
Brexit?

When
Theresa May called the snap election on April 18, the public opinion polls showed
her governing Conservative Party to be enjoying a commanding 20 percentage
point lead over the opposition Labour Party. She called the election three
years ahead of the end of the current parliamentary term in 2020 with the hope
that a stronger parliamentary majority would strengthen her negotiating
position ahead of the scheduled June 19 start of the two-year Brexit
negotiation with EU. She knew that the Brexit process was not going to be easy
and both EU representative sitting across the negotiating table and her
hard-line or pro-stay EU party mates would add unexpected problems while the
negotiations are ongoing. She had threatened a hard Brexit stand if the EU
imposed too tough conditions on the negotiations.

Following the UK general election, French President Emmanuel Macron and German Finance Minister Wolfgang Schäuble have
expressed their willingness to take the UK back into EU if the UK so wished.

In a surprising result, the Conservatives suffered a net loss
of 13 seats with 42.4 percent of the vote and a seat count of 317, which was
short of the required parliamentary majority of 326 seats. The opposition Labor
Party made a net gain of 30 seats with a 40.0 percent vote share and a seat
count of 232. This was the closest result in vote share between the two main
parties since February 1974, and was the highest vote share for an opposition party since 1970. The voter turnout was 68.7 percent, which was 2.3 percent higher than the
2015 general election. Although many reasons contributed to the election
debacle of the Conservative Party, it should be noted that the higher turnout
was the result of a higher youth turnout in the election. Last year’s Brexit
referendum had distinct age and geographic divisions, with the young and urban
voters tending to vote for Stay, and the older and rural folk tending to vote
for Exit.

After the election, Prime Minister May had to fend off
calls for her resignation and her rhetoric on Brexit shifted to a more
conciliatory tone that favored a “soft” Brexit.

Brexit
Negotiations Ahead

Following the UK general election, both the new French President Macron and
the venerable German Finance Minister Wolfgang Schäuble have expressed their willingness
to take the UK back into EU if the UK so wished. Chancellor of the Exchequer
Philip Hammond has launched a campaign to put business at the heart of Brexit, and
has warned that crashing out of the EU without a deal would be “a very, very
bad outcome for Britain” and that the country has to leave the EU “via a slope
and not a cliff-edge.” Hammond’s conciliatory pronouncement was a significant
departure from earlier emotional statements by pro-Brexit politicians about the
EU’s infringement on the UK’s national sovereignty, and the harms by immigrants
to UK society. Hammond’s focus on business is an argument in favor of staying in
the EU, or at the very least, a call for maintaining the special relationship
with the EU.

The official Brexit negotiations that started from June 19 are not going to
be easy for the UK. The new-found political consensus of France and Germany
will mean a united EU sitting across the negotiating table. They must make it
tough for the UK to leave to deter other opportunistic members from following
the UK’s exit. The combined GDP of the remining EU countries is more than 4
times that of UK, giving the EU a strong hand in business negotiations. The
hope of UK to reach liberal free trade agreements (FTAs) with countries such as
the US, China, Canada, and Australia is not likely to happen sans a UK-EU FTA. The
remaining EU countries account for 45 percent of the UK’s external trade and the
EU is the natural candidate to reach the first FTA with the UK. The reworking
of thousands of agreements that the EU has entered on behalf of the UK, and the
EU rules in so many areas, mean a long and messy road ahead for the Brexit
negotiations.

Challenges to Political Leadership

The June 9 election has resulted in a politically unstable UK government
and the possibility of another general election is looming large. If there is a
new general election and if the candidates who advocate for a reconsideration
of Brexit win in that election, then the possibility of an exit from Brexit
cannot be discounted. That will mean the end of the political career of Prime
Minister May and mark a colorful start and end of populism in the UK. In the
meantime, the UK public and the world will watch closely the ongoing Brexit
negotiations and hope for a good outcome that will not disturb the current
economic order.